Australia housing bubble

[Yellow_Festiva]

Originally Posted by Citroënbender

How’s the health of it’s strata scheme?

Two auctions within 150m of me yesterday, didn’t go to either.

That's the next thing I'm going to look at. Not spending money doing searches till I get some positive news on the offer.

It's an older building, perhaps 25-30 years so anything that can happen should have happened by now. No lift, no pool etc.

Originally Posted by lra

Nope. 'Cos when I die, they will be inheriting a million dollar house.

Only if you die suddenly. If you have an illness with a slow deterioration your house will likely be sold to pay for your acceptance into a nursing home.

That aside.. what about all the kids who don't have parents to inherit from? Given that wages have not grown to keep up with property costs, what happens to those people?
Besides, most people don't need a million dollar house when they're at an age that their parents die, they need a house in their early 20s so they can start a family if they so wish. It's no wonder people are putting off kids into their 30s.

[Citroënbender]

Fire compliance is one detail buildings get reamed on. Glazing another (glass specs, not just restrictors). We are still funding the replacement of rubbish aluminium windows with like. People immediately dismiss uPVC double glazing without proper scoping.

I’m getting apprehensive about the media feeding “mould mania” and the risk then is tenants/committees fixating on damp basements or other similar issues where there is no quick fix, no cheap remedy and no perfect solution.

[Yellow_Festiva]

Originally Posted by leesa

Only if you die suddenly. If you have an illness with a slow deterioration your house will likely be sold to pay for your acceptance into a nursing home.

That aside.. what about all the kids who don't have parents to inherit from? Given that wages have not grown to keep up with property costs, what happens to those people?
Besides, most people don't need a million dollar house when they're at an age that their parents die, they need a house in their early 20s so they can start a family if they so wish. It's no wonder people are putting off kids into their 30s.

Sorry Leesa, people need to lower their expectations and get with the times.

You can still buy a comfortable 2br unit with garage in Sydney for well under $400k.

Stretch it to 600k and you can get 3br, 2 bath and 2 car garage unit. Or a townhouse / villa with some yard space in a cheaper area.

Stretch it to 700k and you start getting into 3br / 2 bath 2 car townhouses and Villas in a nicer area, or a freestanding house in a cheaper area.

That's Sydney, would be less in other state capitals. Much less again in regional hubs.

Why am I saying this? Because anyone that works full time alone can enter the property market.

Any couple can get something nicer and bigger if they so choose.

Especially in this market - bugger all interest rates, low unemployment, and the lower end of the market (anything not a freestanding house) remaining stagnant or seeing very very slight increases.

The people that keep crying they can't enter the market or can't save a deposit are the same ones that line up at 4am to get the first iPhone 15 and refuse to work overtime or weekends because it's 'their time'...

I did it... going through a nasty divorce, an even nastier separation from my criminal ex partner which cost me hundreds of thousands in legal fees.

And I just sold my million dollar Sydney mansion which they of course tried to get of me but I retained because truth be told they both contributed nothing to it.

My dad only did primary school and can hardly read and write, mum stayed home.

If I can bloody do it ANYONE can.

You simply cannot please some people - especially the younger generation. Look at me saying this yet I just turned 42.

But I had the same mentality at 22 and at 14 when I started working to build my property portfolio and dreamed to be retired at 40.

Don't take my post as me gloating or showing off. It just proves a point that ANYONE can do it if they want, especially after the hell my last 5 years have been.

[Yellow_Festiva]

Originally Posted by Citroënbender

Fire compliance is one detail buildings get reamed on. Glazing another (glass specs, not just restrictors). We are still funding the replacement of rubbish aluminium windows with like. People immediately dismiss uPVC double glazing without proper scoping.

I’m getting apprehensive about the media feeding “mould mania” and the risk then is tenants/committees fixating on damp basements or other similar issues where there is no quick fix, no cheap remedy and no perfect solution.

Yep... fully aware of those things, was the Building Manager for a low rise block of 90 units for a little over a year and now work in the city casually as a concierge in a 50 story tower of 300 units and work with their BM to advise and give my thoughts on their own problems when they arise.

As long as they have some decent coin the the sinking fund it should be ok.

Originally Posted by Yellow_Festiva

Sorry Leesa, people need to lower their expectations and get with the times.

Why am I saying this? Because anyone that works full time alone can enter the property market.

You simply cannot please some people - especially the younger generation. Look at me saying this yet I just turned 42.

But I had the same mentality at 22 and at 14 when I started working to build my property portfolio and dreamed to be retired at 40.

Sorry Yellow Festiva but at 42 you're out of touch with the experience of younger generations. You got in at the tail end of a reasonable economy, just before the industry was shifted to an investment opportunity. If you had to do it all again today, including saving for a deposit while also paying rent at today's rates, I'd think you'd have quite a different experience.

Edit: out of interest how much did you pay for the million dollar mansion that you just sold?

[Yellow_Festiva]

Originally Posted by leesa

Sorry Yellow Festiva but at 42 you're out of touch with the experience of younger generations. You got in at the tail end of a reasonable economy, just before the industry was shifted to an investment opportunity. If you had to do it all again today, including saving for a deposit while also paying rent at today's rates, I'd think you'd have quite a different experience.

Edit: out of interest how much did you pay for the million dollar mansion that you just sold?

Out of touch?? I'm a High School teacher. I think I have a pretty good grasp on the younger generation.

I paid $525k for vacant land in cash after selling off other assets and built it together with a builder using surplus funds and borrowed money. I did a lot of the work myself where I could, sourced materials myself, saved money where I could.

https://www.domain.com.au/885b-henry...213-2016939715

If I did it all again nothing would change. Hard work across multiple jobs, sacrifice, investing and watching what I spend.

Sometimes the game gets harder, but the fundamental rules stay the same.

[lra]

Originally Posted by leesa

Only if you die suddenly. If you have an illness with a slow deterioration your house will likely be sold to pay for your acceptance into a nursing home.

That aside.. what about all the kids who don't have parents to inherit from? Given that wages have not grown to keep up with property costs, what happens to those people?
Besides, most people don't need a million dollar house when they're at an age that their parents die, they need a house in their early 20s so they can start a family if they so wish. It's no wonder people are putting off kids into their 30s.

All good points, but ......

When a person is admitted/committed to a nursing home, the house is usually sold and the proceeds used as a 'bond' to the nursing home. On their death, most of this bond is returned to the estate. There is also a limit to how much of this bond can be retained by the home. So the recipients of this estate inheritance do not lose that much. Not speaking from personal experience, but from the experiences of friends and rellies.

Personally, my wife is from a 'houso' family. Her father was a WW2 PTSD sufferer who refused the 'charity' of DVA. End result, her mother was left with nothing, and when she died, we had to pay the funeral expenses, as the other family members had made 'poor life choices' and could not afford to kick-in for the funeral. My wife's inheritance .... zip.

After my fathers death in 2017 and will distribution, I inherited about enough to buy a new Mustang, if I had wanted one. By this time we had paid off our house and cars and were debt free.

As written in other sections of this forum, it has never been easy to buy
a house, (thanks for nothing, Paul Keating). Current house buyers do not understand the concept of high interest rates where your repayments only just cover the interest.

Lifestyle adjustments are needed for those in their 20s and 30s. No latest electronic devices, no dining out at restaurants, no deliveries of overpriced fast food, no overseas holidays (COVID free times).
How boring ! Well, stiff cheese. You can't always get what you want, but if you try sometime you find you get get what you need (thanks, Sir Mick)

Originally Posted by lra

Current house buyers do not understand the concept of high interest rates where your repayments only just cover the interest.

I think most people today would jump at the opportunity to pay 17% interest with the house-to-income ratio of that time period. Everything extra you threw at the loan would pay it off faster, without penalty.

Originally Posted by Yellow_Festiva

I paid $525k for vacant land in cash after selling off other assets and built it together with a builder using surplus funds and borrowed money. I did a lot of the work myself where I could, sourced materials myself, saved money where I could.

Out of interest what did you do between your 20s and mid30s? Were you living with parents to save a deposit or renting? It's a beautiful house but it seems like you might have had more help than most? How did you manage to save 500'000 in cash at a young age on a single income without handouts or an inheritance?

[.:4:.]

It was always a common topic at smoko, and not just guys in their 20s, but even some blokes in their 40s and 50s, and that topic was never going to be able to get into the housing market. Yet these guys happily payed rent, would save for overseas trips, cars etc. Now, i bought in 2012 when sydney prices were beginning to go nuts, i was 25. At the time i wasnt earning big $ and yes it was not particularly easy to start with. A lot of overtime, and luxuries were sacrificed. But over time my wage went up, and the mortgage didnt. But subsequently in the following years property prices inflated quicker then wages, so my dads advice of get in when you can was good advice. Especially now as my weekly mortgage repayment is less then renting a 2 bedroom flat.
I have a mate whos mum passed when he was a child. So his inheritance was released when he was 18. When he was 19 he looked into buying a unit, but did the euro trip insted, when he was 20 he bought, but ended up paying close to 100k more for a comparable unit to what he was looking for 12 months earlier. But he is smart enough to realise it was a silly decision to hold off. But to be fair, he was young, had no one to look up to for guidance, and had money. And with that, when your young, you live for the now.

[Yellow_Festiva]

Originally Posted by leesa

Out of interest what did you do between your 20s and mid30s? Were you living with parents to save a deposit or renting? It's a beautiful house but it seems like you might have had more help than most? How did you manage to save 500'000 in cash at a young age on a single income without handouts or an inheritance?

No, I finished Uni at 22 after doing 2 degrees (primary teaching and high school subject). Oh, before you ask I paid for my degrees myself upfront. While at Uni I was living at home and paying board.

I worked for a year, during that time I lived in an 15br share house in the Eastern suburbs of Vaucluse paying $100 per week. Not a bad gig considering the bloke in charge had a preference for young European female tenants.

Worked a ton, saved a ton. Took a year off to go backpacking.

Returned after a year, put a deposit on a modest 4br house out west with the money left over from my trip, converted it to 6br and rented 5 of the rooms out averaging $700 a week.

Stayed there for a few years. Met my ex Mrs, sold house and bought 2br unit closer to city outright in her name as she didn't need to pay stamp duty (big mistake...).

Anyway, how did I get that money? When I found the block I refinanced the unit and pulled most of the money I put into it.

Also sold a house I had in Cowra, a Villa in Bathurst and accessed money I had in a term deposit that matured about the same time.

Prior to that I had bought, renovated and sold other places before meeting my ex. One house in Eagle Vale, a unit in Warrawong and a house in Dubbo.

The house in Eagle Vale was bought at 18 with some help from my parents. That was my first place. They matched any deposit I could come up with, but that place was $144k if memory serves so it wasn't as much as you would assume.

I made lots of mistakes along the way. Invested substantial cash in a property development company that went broke, put too much trust in my now ex wife, and didn't seek advice on arranging my financial affairs better but hindsight is a wonderful thing.

And, after all that I don't regret a thing. I do wonder where I would be financially if I didn't sell everything off or meet my ex's but then I would not have my 2 beautiful daughters.

Now I'm going to sit back and relax and take each day as it comes.

[lra]

Originally Posted by leesa

I think most people today would jump at the opportunity to pay 17% interest with the house-to-income ratio of that time period. Everything extra you threw at the loan would pay it off faster, without penalty.

Don't know what mathematics universe this would work in.
You could borrow what you could just afford to repay. When interest rates went higher, from a reasonable 8>9% that ability went out the front door. Just covering the interest amount became the goal, so being able to chuck extra disposable cash at the loan 'back then' is a 21st century fantasy ..........
and if you tell that to the young people today, they won't believe you.

Originally Posted by lra

Don't know what mathematics universe this would work in.
You could borrow what you could just afford to repay. When interest rates went higher, from a reasonable 8>9% that ability went out the front door. Just covering the interest amount became the goal, so being able to chuck extra disposable cash at the loan 'back then' is a 21st century fantasy ..........
and if you tell that to the young people today, they won't believe you.

Yet even the local factory worker could afford to buy a house and stay at the factory for 30 years. Besides, that rate was temporary. My point was that most young people today would jump at the chance to buy property back then given the income/house ratio. There's just no comparison that housing today is as accessible as it was back then.
Now we all have constant financial stress, both parties working and delaying having kids, heavy commute times to and from work, no time left to spend with the family at the end of the day, kids ending up with mental illness, frequent divorce and just generally no time to stop and smell the roses. Do you think it's been worth it? I don't.

[Yellow_Festiva]

Originally Posted by leesa

Yet even the local factory worker could afford to buy a house and stay at the factory for 30 years. Besides, that rate was temporary. My point was that most young people today would jump at the chance to buy property back then given the income/house ratio. There's just no comparison that housing today is as accessible as it was back then.
Now we all have constant financial stress, both parties working and delaying having kids, heavy commute times to and from work, no time left to spend with the family at the end of the day, kids ending up with mental illness, frequent divorce and just generally no time to stop and smell the roses. Do you think it's been worth it? I don't.

Doesn't have to be stressful.

Woulda, coulda, shoulda is meaningless and a waste of time... trust me I know more than most

Just assess your financial situation. I make X per week and work back from there.

Ask a broker what you can borrow. Perhaps aim for 80% of that figure for breathing space and start looking for something.

Not your dream place, not your forever home, just something to get a foot in the market. If you are alone get a 1br, however if it isn't much more a 2br is easier to finance and easier to rent out after.

You could even find a person to rent the 2nd bedroom.

With the low rates and first home buyer incentives you would be MAD to not take that up and get into the market.

Especially if you are currently renting.

Never had those perks when I bought... and my interest rate was 3-4 x what they are now.

[T3rminator]

Originally Posted by leesa

Yet even the local factory worker could afford to buy a house and stay at the factory for 30 years. Besides, that rate was temporary. My point was that most young people today would jump at the chance to buy property back then given the income/house ratio. There's just no comparison that housing today is as accessible as it was back then.

Agree with this statement. Dad was a warehouse manager and mum was a teacher back in the days, I have no freaken idea how they managed the repayments when interests were in the mid teens. Its not like we were living scantly either.....2 cars, overseas trip every 2nd year etc...

Having said that, data actually shows that whilst income to price ration has soared, the actual % of income spent on housing costs hasn't actually grown that much.

For example:
In 94-95, 4.6% of households spend 50% of their income on housing costs.
In 2019, that number 5.5%.

https://www.aihw.gov.au/reports/aust...-affordability

[Yellow_Festiva]

Originally Posted by T3rminator

Agree with this statement. Dad was a warehouse manager and mum was a teacher back in the days, I have no freaken idea how they managed the repayments when interests were in the mid teens. Its not like we were living scantly either.....2 cars, overseas trip every 2nd year etc...

Having said that, data actually shows that whilst income to price ration has soared, the actual % of income spent on housing costs hasn't actually grown that much.

For example:
In 94-95, 4.6% of households spend 50% of their income on housing costs.
In 2019, that number 5.5%.

https://www.aihw.gov.au/reports/aust...-affordability

Yep, my parents were the same. Mum always told me that at the end of the week there was always cash left over to spend on other stuff even with the high rates.

Regarding those statistics, I wonder what influence units and apartments have?

94-95 'housing' was (generally) a block of land with a yard and a Ford or Holden in the driveway.

Very different now. More houses are being replaced with units / townhouses / villas that are cheaper to buy but still cost a lot compared to current income.

[blueoval]

Yellow_Festiva - I wish I could 'thank' your posts on this page more than once. Im not much older than you and grew up with a similar mentality. Get on with it, work hard, focus on the dream, make necessary sacrifices, and get something cheap to get your foot in the door. The more wasted time complaining and whinging I did about the conditions, the more cheaper properties were being snapped up, and I didnt get into the market till 2008.

[Syndrome]

Yesterday I witnessed the madness which has descended upon the market. A house was going on auction and I was keen on it. Did all the preparation work. Listed for sale between just below $700 to mid $700 range. I was wiling to offer close to $800. As soon as I arrived I realised things were not good as there were lots of people. Bidding started at $600,000 which was a promising sign. But there were several bidders and it went up rapidly. Came down to the last two - me and another guy. And he wouldn't relent. So I threw in a big increase to try and scare him. It didn't work. Tried again. Still no good. So I thought to myself "okay you screwed me so I am going to make you pay" and kept increasing even though I was not willing to pay that much for that house. The danger was if he stopped and I ended up overpaying. Read it perfectly as I made the prik pay almost $100K over the listed price range. The sellers should thank me.

[.:4:.]

When i bought my place the realestate agent was talking down my offers as he claimed it had sold 3 times before for more. Im not an idiot, 1 time was the bank didnt agree with the property valuation. The other 2 prospective purchasers had their mortgage applications declined. So maybe its all who you know, and maybe its realestate agents wanting the commision. But i beat the price down and paid what i wanted. Well, 30k less then asking price atleast. If things were priced the way i want them everything would be free.

[Mulva]

I get that a lot of members live in Sydney, and when talking house prices you are going to talk about your local prices, but housing affordability in the rest of Australia is nowhere near as mental as Sydney.

I do think Sydney real estate is stupid, and do have no idea how any young person can easily break into it, but then it has been that way as far as I know from watching from a distance here in SA.

The young people in SA that try pushing the same "can't enter the market" argument are full of **** though. This will sound totally boomer but their expectations of first home and its location is just ridiculous; and they're not prepared to buy what/where they can afford then upgrade every few years once they've built equity through paying down the mortgage (instead of paying rent) while the property they own also generally appreciates.

It is why they call it getting on the bottom rung of the property ladder; you take a few steps over many years to get where you want to be. Here in Adelaide there are many good (more than acceptable and more than affordable) options as a first home, but young people I know say "Oh, it's too far out" when truth is it would be 3-5 minutes longer drive (if that) to their work compared to where they currently rent, but it is in a different direction. If you don't believe me, search our local real-estate and see for yourself.

Sydney prices have never made sense to me though. Like late 90s I'd be watching shows like Hot Property, and you see early/mid-20s couples buying a western Sydney weatherboard house for about $580k, and in SA you're firstly going WTF at the price and then you are going HTF is that young couple even getting a $580k mortgage? Then you find out they are taking out 50 year mortgages instead of 25 which was the 'standard' mortgage term here at the time.

In late 90s my annual wage in Adelaide was $42k, same role in Sydney was $47k...but $420k in Adelaide back then got you a modern 4 or 5 bedroom home with inground pool within 30 mins of CBD; whereas $470k in Sydney late 90s would not have got anywhere near that back then even out west. So ****ed if I think anyone has ever been "easily" able to get into Sydney's market.

Our parents working factory jobs and buying houses in 1960s/70s/80s that are now inner/mid suburbs were actually non-desirable outer suburbs back when they built/bought.

[MITCHAY]

A house sold the other week for a suburb and district record price of $1.63m. $200+k over district record and $360k+ over suburb record. 6 suburb records in one week!

To be fair you can get a whole ****en lot of house and block for these prices out here unlike everywhere else around Australia. It has Brindabella Range views which are pretty desirable.

It's about ~30km from the CBD. I live around here and it is a pretty easy drive. There are choke points depending on the time but they are working on projects that should make it a lot better. Still nothing like you get in Sydney or Melbs though.

[oldel]

Originally Posted by Mulva

Our parents working factory jobs and buying houses in 1960s/70s/80s that are now inner/mid suburbs were actually non-desirable outer suburbs back when they built/bought.

That is true, but a pointless comparison that ignores the numbers. 15min drive from old cheap undesirable suburbs back in the day has no comparison to the 1hr commute 50km away, especially in an era with increased traffic and transport costs.
So it's the same, but nothing like it. It didn't cost them 100pw in fuel and a 2hr drive each day in traffic LOL.

Yeah, that's where first home buyers have to go live these days for affordable housing, but it's a huge cost and time burden that previous generations didn't have to put up with.

[Trendseeker]

It’s a good comparison if he’s referring to Sydney. Back in the 60s and 70s many young families settled in suburbs 24 to 32km from the CBD. Fibro/weatherboard houses at that distance we’re about $60k to $80k in the late 70s. Most commuters to the CBD travelled by train and the trip took 45 to 60 mins each way. Today, commuters from further out make the 50km trip to the city in about the same amount of time as there are express services. Train fares are much the same after adjusting for inflation. The time and cost burden hasn’t changed much.

[oldel]

Factory jobs in the CBD eh?
I know what you mean, Sydneys had long commutes for decades, but I was more talking about their SA (and my WA) experience. Public transport is about getting to the CBD. Factory area less serviced most of the time so you have to drive - or getting to the CBD is only half the journey. Then you need to bus out again to actually get where you need to work. But many industrial areas don't have many (some any) buses, so a long walk on top LOL. So you're probably driving, stuck in traffic and with todays fuel prices...

[shedcoupe]

Was talking about the notion of getting a trade with a young bloke just out of school some years ago.
Suggested it was a good idea to not piddle away the wages (like I did ...) and save up for a block of land.
Kid - 'Oh but I've got a house already - granny gave me a house in (a leafy desirable suburb ...)'.
Me - 'Okaaay - hookers and coke it is then !'.

[b0son]

Originally Posted by Yellow_Festiva

Never had those perks when I bought... and my interest rate was 3-4 x what they are now.

No, but what you did have was the benefit of equity growth. We bought our first home in 2004, friends of ours bought their first in 2000. That was one of the single biggest growth periods in Sydney and they capitalised on every cent of that equity growth to start growing a property investment portfolio, and by my estimate, that 4 year head start gave them the equivalent of $300-400k in additional spending power. For my wife and I, that would have taken 7-10 years of saving.

This is what so many people gloss over. Property has been a largely low risk investment for those lucky enough to have equity and/or the income to take advantage at the time of a boom. It's quite disingenuous to imply someone who was in a financial position to take advantage of a boom was necessarily working harder than someone who was not.

And let's not even bring up wages growth since the mid 90s to mid 00s, compared to the last 10 years. Then, rates were falling substantially, and incomes were growing substantially, so serviceability was improving substantially. We're at record lows, there is NO prospect of rates going down, all long term fixed rates are now going up. If you are stretched getting into property today, it will be likely worse in 2-3 years. Not the case after 17% rates... they were less than half that within 2 years.

[Syndrome]

Last week I was outbid on a house which was average yet was in hot demand with several people bidding causing the final price to be well over what it is worth. Today a much better house in the same suburb hardly had any interest and sold for less than expected. None of this makes any sense.

[roKWiz]

Originally Posted by Syndrome

Last week I was outbid on a house which was average yet was in hot demand with several people bidding causing the final price to be well over what it is worth. Today a much better house in the same suburb hardly had any interest and sold for less than expected. None of this makes any sense.

So, did you buy it.

[zilo]

Originally Posted by Syndrome

Last week I was outbid on a house which was average yet was in hot demand with several people bidding causing the final price to be well over what it is worth. Today a much better house in the same suburb hardly had any interest and sold for less than expected. None of this makes any sense.

Get a big bag of popcorn and sit back...the blood letting will begin soon enough.